Fuel retailing: OMCs gear up for intense competition
New Delhi 21-Aug-2015
The year 2015-16 could be the first one when the true impact of deregulation in the fuel retailing segment would be seen in terms of greater competition.
Weakness in crude oil prices, coupled with stable fuel prices at home, have revived the retailing plans of private entities. And, state-run oil marketing companies (OMCs) are not far behind. Together, the players are setting up around 3,000 retail outlets this year against 2,000-odd last year.
Hindustan Petroleum Corporation (HPC) would set up 1,000 retail outlets this year, Bharat Petroleum Corporation (BPC) another 650 and Indian Oil Corporation (IOC) might set up at least 1,000.
“We have not aggressively expanded our reach for the past two years. This year, we have decided we will reach out to areas we are not present in. Opening up of the retail segment makes it imperative for us,” said a senior official from HPC, second largest fuel retailer.
In 2014-15, it commissioned 380 new retail outlets, which includes 101 in rural areas, taking the total to 13,233. The sales volume was 21.39 million tonnes. BPCL, third largest fuel retailer with 12,864 outlets would be setting up 650 more. It has planned a capital expenditure of Rs 10,000 crore for FY16 and Rs 8,000-10,000 crore for FY17.
IOC, the largest OMC, said it was a strong player in the market and had been progressively making improvement, in terms of standardised looks and feel.
To face the increased competition, all the OMCs have been automating their retail outlets. B Ashok, chairman of IOC, said they should be able to automate around 10,000 outlets by the close of this year.
“We would have 18,000 automised outlets. We have also launched city-specific automation. We have 6,500 Kisan Seva Kendras. Pumps have gone to villages; earlier, villagers used to come to highways to buy fuel,” he said.
BPC has automated 5,657 retail outlets, with a facility to remote-monitor the premises remotely and track product stock. HPC has 2,309 automated retail outlets. Among private entities, Essar Oil is the most bullish on the fuel retailing segment, after the diesel price deregulation. After setting up 1,500 fuel outlets and having 1,400 under implementation, it is planning to set up another 2,100, taking the total to 5,000. This will make it the largest private fuel retailer in the country. “Our retail front is making a lot of progress... our target now is to reach 5,000 retail outlets,” Lalit Kumar Gupta, managing director and chief executive officer, had recently said.
Reliance Industries had 1,400 outlets but only 400 are now operational. It plans to re-open the rest by March 2016.
The government deregulated diesel prices last October, providing a level field for private and state-owned fuel retailers. The three OMCs have 95 per cent of the fuel retailing market.
